Sinopec's Q3 Net Profit Rises 57% as Higher Oil Prices Lift Refining Margins

what happened

China Petroleum & Chemical Corp., known as Sinopec, reported net profit of 13.36 billion yuan ($2 billion) for July to September, up 57.2% from a year earlier, according to Reuters. Dow Jones Newswires also reported the jump. Revenue rose 9.3% to 769.74 billion yuan.

The company credited better refining and chemical margins, along with a higher yield of in-demand products such as jet fuel and naphtha. Sinopec said the average spot price of Platts Brent over the first three quarters was $94.05 a barrel, 33% higher than a year earlier.

Domestic consumption of refined oil products fell 8.6% over the same period, as high prices curbed demand and the shift to new energy accelerated. The conflict in the Middle East, where the United States and Iran are clashing over the Strait of Hormuz, continues to support prices by disrupting supply.

why it matters

For markets, the results show that high oil prices can lift refiners' earnings even when fuel demand is weak. Sinopec's Hong Kong shares are down 1.93% so far this year, while the Hang Seng index has fallen 10.42%.

market impact

Sinopec shares: higher profit supports the stock; Brent: high prices keep refining margins strong

• ▲Sinopec shares (0386.HK) pressure up — higher net profit and refining margins support the stock

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